China's one-child policy lies behind the success of a public-private stem-cell bank. Geoff Watts explains

The building looks innocuous enough - a five-storey marble-and-glass edifice standing in a new business park in the city of Tianjin, some 130km from Beijing. It could be the office of some financial institution grown prosperous amid China's economic boom.

But the sign above the door gives it away: "Union Stem Cell and Gene Engineering Company Ltd." It is indeed a bank of sorts - but a blood bank that holds the stem cell-rich blood retrieved from umbilical cords. A venture such as this, combining cutting-edge clinical biomedicine with pioneering public private finance, would have been unthinkable just ten years ago. Its success epitomises the remarkable changes in Chinese society.

Han Zhong Chao, professor of haematology at the Peking Union Medical College, calls it Life Bank. A bespectacled man in his early fifties, he sips tea in the company boardroom as he explains how the venture came into being in the late 1990s. "It was my idea to set up a cord-blood bank because I believed that stem-cell technology could save the lives of many people with blood diseases. To treat them we needed a source of stem cells.

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At that time we didn't have a stem-cell bank in China."

Han's mild manner belies his considerable achievement. "At first we just wanted to establish a public bank supported by the central and local governments," he continues. "But we had difficulty getting the money to set it up." Although the authorities liked the idea, they would not provide all the funding. Han reckoned a commercial blood bank would be feasible, but he was concerned that the cost would put it beyond the reach of most of the population. His solution was as neat as it was simple: set up private and public banks operating in parallel.

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One of Han's colleagues, haematologist Wang Min, says: "This is the first system in the world to combine the private and the public, and use revenues from the private bank to support the public one."

The value of cord blood in the treatment of certain disorders has been recognised since the late 1980s. The drugs and radiation used to treat leukaemia, for example, kill off not only cancer cells, but also the healthy stem cells that replenish the blood system. These must be replaced.

Bone marrow is one source, says Wang, but not the best. "Umbilical cord blood has a very high population of stem cells. Normally this blood is just discarded." But if it is frozen with liquid nitrogen, it can be stored for years, to be used when needed.

Like any other transplanted tissue it has to be matched. And the more blood samples that can be stored, the greater the likelihood of any new patient finding an acceptable match.

Inside the "vault" of Life Bank's headquarters is a securely locked room some 50m long. Through windows in its flanks, 20 or so large chest freezers, each connected by a pair of flexible pipes to a row of steel vats full of liquid nitrogen, are visible. Inside is the blood.

But most of the room is empty. At a rough estimate it could probably hold ten times as many freezers as Han has so far installed. This is a measure of his confidence.

When British scientists visited China last year they reported being "struck by the clear imperative among Chinese stem-cell researchers to make an impact on clinical practice". This eagerness to pursue clinical trials, they added rather glumly, "tends not to be seen in the UK".

Behind the Chinese researchers' enthusiasm is a Government that has identified biotechnology in general and stem cells in particular as meriting serious investment. That means new buildings, new equipment, new university appointments - and salaries and career prospects that are sufficiently attractive to bring increasing numbers of expatriate Chinese back home. Han is not the only Tianjin haematologist who established his reputation in the West. Wang, for example, spent four years at the US National Institutes of Health.

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The private income that has made the project possible comes from payments for storing an individual child's cord blood for two decades. This costs parents an initial $2,000 (?1,090), plus a further small annual payment. The benefit is that any such child who later needs stem cells has exclusive access to the only source guaranteed to be not just a good but also a perfect match: his or her own.

Was it difficult to set up a private bank? Not at all, says Han. "In China, with our one-child policy, parents want to do everything they can for their children." This strict limitation on procreation certainly makes parents apt to worship their offspring, many of whom are treated - as they say in China - like "little emperors".

And what about the cost? "Many families have no problem paying this," says Han, breezily adding that grandparents often chip in. Not that they need to, judging by the obvious signs of affluence in and around the cities. The main road from Beijing to Tianjin passes at least three golf courses. Union Stem Cell and Gene Engineering, the vehicle through which Han is realising his blood banking and other ambitions, raised $30 million on the Shanghai Stock Exchange. The company operates in conjunction with the Peking Union Medical College at which Han is based. He brings authority and formidable experience to the project, having spent more than a decade in France, becoming a professor of haematology in Paris before returning to take up the directorship of the college's Institute of Haematology, part of the Chinese Academy of Medical Sciences.

Over lunch in a nearby restaurant - a private room, naturally - and speaking in chief executive mode, Han says that, since 2001, more than 20,000 people from all over China have deposited blood. Further samples are now coming at about 1,000 per month. The success of the private bank has, as Han all along intended, led to the creation of its public counterpart.

This has so far accumulated about 8,000 cord-blood samples, mostly from the Tianjin area. The pool is further enlarged through China's membership of AsiaCORD, a pan-Asian collaboration between banks in Tokyo, Seoul, Bangkok and elsewhere in the region.

Han tells me that his next plan focuses on treatment. "We're setting up a new hospital especially for stem-cell transplants," he says, pointing to the glass-and-steel building next door: finished but not yet occupied.

"When stem cells are needed," he says, "they'll simply be taken from one building to the other."

Research is also part of the package. Han, Wang and the rest of them talk of using cord-blood cells in adult as well as childhood leukaemias, of investigating their potential in cardiovascular disease and diabetes, and even of repairing damage to the nervous system and the liver.

Han has invited his very first depositor along to meet me. Ji Xing Wang, a local businessman who speaks good English, says he knew nothing about the significance of cord blood before the bank set up shop. He heard about it at a critical time. "Just two weeks before my daughter was born I read an article in a newspaper about cord-blood banking. I hope my daughter will be a healthy girl, but this is a kind of insurance policy." The expense? "I can afford it. I paid little attention to the cost."

Ji's daughter is now four. He pulls out a picture of her, then reveals the near obsessional feelings that many Chinese parents have for their single child. "I photograph her every day," he tells me. "Altogether, I have taken 5,800 photographs."

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Several times during our conversation he breaks off to speak in Chinese to a woman sitting with him in the room. We are not formally introduced, but I take her to be Ji's wife. I later discover that she is actually the Life Bank's public relations consultant: further evidence of the nature of change in China. Not so long ago any such third person would almost certainly have been a party apparatchik.